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Virgin Media customers who have been hit with "early exit penalties" could be offered compensation as telecoms watchdogs have said the charges are unlawful.

Home movers were being penalised with excessive "early disconnection charges" when they moved to an area not supported by Virgin Media before their contract ended. Virgin Media broadband is only available in around half of the UK.

It follows a formal investigation launched in June last year into the fairness of the company's terms and conditions, specifically its charges for ending a contract early, after receiving complaints from customers.

In a preliminary decision published today, Ofcom has said exit fees of up to £240 charged between 1 September 2016 and 11 September 2017 are in breach of Ofcom rules.

Details of any compensation owed to consumers will be revealed later this summer in Ofcom's final decision. It is understood that Virgin Media could also receive a fine for treating consumers unfairly.

An Ofcom spokesman said “Having assessed all available evidence, we have reasonable grounds to believe that Virgin Media has broken our rules by overcharging people wishing to leave their contracts early.

“Virgin Media now has an opportunity to formally respond to our provisional decision. We will take any further representations the company makes into account, before making our final ruling.”

A Virgin Media spokesman said: "We have received Ofcom's provisional findings and we will now review them thoroughly.

"We make it clear to customers that early disconnection fees can apply and we also offer 30-day rolling contracts for those that do not want to sign up for a minimum period, such as 12 months, and need more flexibility."